Home-sharing is no longer a niche economy – it’s officially mainstream.
The early adopters have come and stayed and now the majorities are hands-on hosts, fluffing towels and plumping pillows.
It’s an exciting time to be part of this brave, dynamic, new world of peer-to-peer ‘sharing’. But it’s old news that home-sharing has become a popular alternative to hotels. Anyone who’s anyone is already earning extra income from their unused or underused asset – whether that’s a spare room or an entire home.
For people with holiday lets and those managing a portfolio of vacation rentals, the home-sharing economy provides access to a huge range of potential guests looking for an experience beyond the traditional hotel – one that provides a more authentic, local outlook.
After considering the potential returns on putting your home to work, many hosts’ thoughts turn to the risks: things like malicious or accidental damage, or if a guest has an accident. Those managing portfolios of properties are also more actively looking for a solution.
With home-sharing now mainstream, hosts need to put proper policies in place as they cannot shut their eyes to the risks. That’s why they need protection from the right kind of vacation rental insurance.
Vacation rental insurance for home-sharing
Insurance – or rather the idea behind insurance – is simple. Rather than crossing our fingers and hoping that the worst will never happen (or only happen to someone else), we contribute to a pot that promises to compensate us if we lose or destroy our most valuable possessions. It sounds simple, but traditional models of insurance simply don’t cover today’s peer-to-peer transactions –especially when it comes to hosting.
We know, for example, that when hosts welcome guests and hand their keys over to a stranger, it’s likely to compromise their existing insurance. Few insurers will cover theft by a guest, unforced entry or malicious or accidental damage. And if a guest has an accident – they fall off a balcony, for example, something that actually happened to a guest renting an Airbnb property – they will probably not be covered either.
Sharing economy transactions require personalized and flexible insurance.
The great news is that innovative new insuretech startups are disrupting the traditional insurance market. They are creating insurance solutions driven by technology, which is changing both the customer experience and the customer’s relationship with insurance.
One of these insuretech innovators is GUARDHOG, who set out not to reinvent insurance, but to invent efficient and accessible insurance solutions specifically for peer-to-peer sharing. GUARDHOG helps hundreds of homeowners and their guests share safely by delivering 24/7 on-demand insurance through their platform, with homeowners paying only for the nights they need cover.
GUARDHOG co-founder and Airbnb Superhost Humphrey Bowles shares his top tips regarding short-term vacation rental insurance.
Dos and Don’ts of vacation rental insurance
To ensure you (or the owners of the properties you manage) have the right protection, here are six essential tips to follow when setting up your short-term rental insurance plan.
1. Don’t assume your existing home insurance policy will cover you
Many property owners make the mistake of thinking their underlying home insurance policies cover their rental property. However, many insurers consider making money from your home a commercial activity. As a result, they are likely to compromise or completely invalidate the existing policy.
For those rare few insurers who say they do cover home-sharing, make sure they provide the cover you need. There is a difference between your insurer allowing you to home-share and having the proper coverage when you’re home-sharing.
2. Don’t assume you need a landlord policy for home-sharing
Landlord policies don’t work for home-sharing because they are traditionally used for ‘tenanted’ properties – and require extensive checks on tenants. While you may screen guests, in general, you will not carry out full checks as travelers only stay a few nights each.
3. Don’t assume Airbnb’s Host Guarantee provides the cover you need
Listing platforms such as Airbnb have done a great job of providing some cover through their guarantee, but they make it clear that this is not a substitute for insurance. Airbnb encourages all their hosts to have the right insurance in place, so follow their advice.
4. Do speak to your insurer (or if you’re a property manager, ask your hosts to speak to theirs)
We know that no-one wakes up in the morning looking forward to speaking to their insurer, but it’s important to have ‘the chat’. The worst thing they will say is that they won’t cover you. It’s always better to know sooner rather than later, so you can organize the cover you need before something goes wrong.
5. Do document it
If you are a property manager working with lots of hosts, make sure they give you a written confirmation which says they have the right vacation rental insurance. It only takes a sentence, but having it can save you a huge amount of hassle in the long run. It’ll also mean you’ve taken all reasonable steps to make sure your hosts are properly informed.
6. Do fill the gaps in your insurance cover with the right ‘sharing economy’ cover
Sharing safely is a must-do for hosts and their guests, so make sure you fill the gaps in your insurance. GUARDHOG’s Host Cover complements existing home insurance policies. Hosts do not need to replace their existing policy with vacation rental insurance, and you can purchase it on a stay-by-stay basis. In other words, you only pay for insurance when you actually have guests to stay.
It covers you for all the risks created by having guests in your home including malicious damage, accidental damage, theft by the guests, unforced entry, public liability – which is when a guest falls out a window, down the stairs, slips in the shower or the heavens (your bedroom ceiling) collapses on their head.
About the Author
Humphrey Bowles is Top Hog at GUARDHOG, specialists in fuss-free, on-demand insurance for the sharing economy. Not only is Humphrey an insurer and professional expert in the sharing economy, but he’s also a participant. With his family, he is an Airbnb Superhost – home-sharing his West London property on the platform.